Should I Pay Off Debt or Invest?

When you receive some extra money it may be difficult to determine whether you should invest the funds or use them to pay debt. One financial theory suggests that if your after-tax return on investments is greater than the after-tax cost of your debt, you should invest. Use this calculator to help analyze a hypothetical situation.

Rates and Assumptions

Interest rate on debt (0% to 40%)

Is the interest deductible?

Before-tax return on investment (-12% to 12%)

Is the interest taxable?

Marginal tax bracket (0% to 75%)

This is a hypothetical example based on the information you provided. The example is for illustrative purposes only. It is not representative of any specific investment or combination of investments. Past performance does not guarantee future results. Actual results will vary.